Infrastructure, tax may dampen IT sector: Nasscom

Infrastructure, tax may dampen IT sector
The Economic Times

India's fast growing IT sector may "hit the speedbreaker" unless top priority was given to develop the road and transport sectors to match international standards, Nasscom president Kiran Karnik said here on Monday.

The imposition of sales tax on computer hardware and software by the Karnataka government, has already driven down the IT sales in the state, the National Association of Software and Services Companies (Nasscom) president told reporters here.

"The states should compete with cities like Shanghai and Kuala Lumpur," he said, adding infrastructure such as the roads and transport systems should be immediately upgraded to international standards.

Raising Nasscom's concerns on the sales tax imposed by the Karnataka government, Karnik said the 4 to 12.5 per cent sales tax imposed by the Karnataka government has resulted in a drastic drop in the first quarter revenues of the companies. "We have not seen any big increase in sales tax collection by the state. Don't put speedbreakers on the industry path," he said.

Karnik said it was good for the states to compete with other states to attract IT firms, but the states should concentrate on developing the roads and transport sector that can match international standards.

"We appreciate the Karnataka government's decision to build an elevated road to the Electronic City by investing Rs 400 crore," he said.